Wages for public school teachers used to be set by collective bargaining agreements that awarded automatic pay increases for years of experience and earned graduate credits. However, state lawmakers dissolved that practice when passing new collective bargaining laws in 2010 that phased out existing union contracts and limited negotiations to base wage increases capped at the rate of inflation.

Many teachers fear the new law, known as Act 10, will severely stunt salary growth. Still, the first steps toward a new compensation system indicate a trend toward very large – though tightly targeted – raises. Oshkosh schools, for example, recently gave $20,000 raises to all school psychologists, and Neenah schools this year raised starting pay for teachers 18 percent.

The trend toward merit- and market-based pay is driven by an accountability movement, which includes new state report cards that attempt to measure schools’ success and may impact funding in the near future. The state will also roll out new requirements for evaluating teachers based, in part, on student test scores starting in the 2014-15 school year.

“In the development of any alternative compensation system, the evaluation process will need to play a huge role. In the private sector, compensation decisions are based on as much a performance evaluation as anything, and that is coming to school districts,” said Barry Forbes, associate executive director for the Wisconsin Association of School Boards.

The stakes of developing a good system are particularly high for Oshkosh schools, which have been struggling with turnover among all levels of staff, from classroom teachers and principals to top administrators. Oshkosh teachers are paid less than most others in the Fox Valley region. The district’s average salary of $50,629 ranks seventh from the bottom out of 31 districts in northeast Wisconsin, according to data from the state Department of Public Instruction.

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Districts like Oshkosh may find themselves forced to pay more for in-demand skills or lose those teachers who can deliver the best results to nearby and higher paying districts, said Jim Hoffman, an outreach and special projects coordinator in the dean’s office for the college of education and human services at the University of Wisconsin-Oshkosh. Hoffman traveled to more than 50 districts and cooperative education service agencies last summer to research their needs in the post-Act 10 landscape.

Competition in the job market is already taking its toll on Oshkosh schools. Oshkosh Northwestern Media analyzed salary data in December and found teachers leaving for other Wisconsin districts between 2009 and 2011 received an average of $4,400, or 14 percent, more from their new employers. The average increase was $5,600, or 19 percent, when only counting those who left for higher pay.

“School districts are going to have to respond to these changes in some way to increase their desirability for new teachers,” said Hoffman, a retired principal from the Oshkosh school district.

Oshkosh schools have not yet developed a new compensation model. Human Resources Director Mike Nault said little discussion has taken place on the subject. District leaders intend to have something in place by the start of the 2014-15 school year to coincide with the new statewide teacher and principal evaluation system launching that year.

“It’s so new. It’s so different. It’s something that school districts aren’t even closely familiar with, and we don’t have any real good outstanding models to go to and check out. I think school districts are just struggling a little bit as to where to go and then finding quality time to explore and investigate those sorts of things, which is imperative for moving forward,” Nault said.

Few districts across the state have approved new compensation models to replace the old step-and-lane salary schedules, but those who have done so are wedding pay with evaluations and student achievement. Neenah, one of the only districts in the region to implement a new system, fully rooted pay raises to its evaluation system and also significantly raised the amount of money teachers can earn, as long as they meet certain performance expectations.

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Neenah used to have a salary range of $34,319 to $71,538 for teachers, but the school board has raised that range to $40,500 to $75,000. Base wage increases negotiated with labor unions could push salaries even higher.

“The board, as far as starting salary goes, was very passionate about wanting to hire and retain the best teachers. They felt they needed to increase and be one of the highest paying districts in the valley for starting salaries,” said Vicky Holt, assistant district administrator for human resources and central services for Neenah schools.

In Oshkosh, the school board has approved some money raises, but it’s not tied in any way to a system that might be used in the future, Nault said. Instead, the raises were directly aimed at attracting and retaining specific staff.

In December, the board approved $350,000 to be given to teachers who earned graduate credits as raises above and beyond any negotiated base pay increase. The board also approved large raises for school psychologists and licensed nurse practitioners as competition for those positions skyrockets.

The Oshkosh teachers union is open to a new pay system that considers performance and job markets in raises but hopes aspects of the old system aren’t lost entirely. John Reiland, vice president of the Oshkosh Education Association, said pay raises for earning graduate credits or other professional development would put value on teachers being life-long learners, and raises based on years of experience encourages loyalty to a single district.

“Yes, evaluations can definitely be a part of it, but we can’t forget about the other variables, too,” he said.